Fields of Poverty

Trade Liberalization and export-oriented, market-based policies in agriculture have

fuelled rather than alleviate rural poverty in Pakistan
By Tahir Hasnain

http://www.jang.com.pk/thenews/jul2005-weekly/nos-17-07-2005/pol1.htm#1
Trade liberalisation under the auspices of World Trade Organisation (WTO) is an
important aspect of globalisation. Developing countries are required to abruptly
liberalise their trade policies under the WTO regime. Pakistan is a great supporter of
trade liberalisation and is among the pioneer members of !TT (eneral !greement
on Tariff and Trade) and the WTO. !t the policy level" Pakistan believes that trade
liberalisation (privatisation" deregulation" no tariff protection) #ill solve all economic
ills and eradicate poverty in the country. That$s #hy e%port driven gro#th has been
the main focus in the last three decades.
The thrust behind the trade policy is evident from a quote by then commerce
minister& 'We can do it if every Pakistani (( the #orker" the farmer" the producer"
the e%porter" the civil servant" the house #ife (( everyone is committed to the cause
of e%ports"' the minister said #hile announcing the trade policy of Pakistan )***(*+.
i
Pakistan is basically an agricultural country and its economy is mainly agrarian.
While Pakistan$s gross domestic product (DP) in )**, is estimated at appro%imately
-./0 billion"
ii
agriculture accounts for about ). percent of DP and 1 percent of the
country2s e%port earnings.
iii
Over three(quarters of the population are to be found in
rural areas and are dependent mainly on agriculture. !ccording to 3abor 4orce
5urvey )**+(*)" /6 percent of the country2s labor force belongs to rural areas out of
#hich 7) percent is employed in the agriculture sector. 4ood products constitute 70
percent of household consumption e%penditure (.1 and ,7 percent in urban and rural
areas respectively) in the fiscal year (48) )**).
iv
Pakistan has taken the unilateral step of carrying out substantial liberali9ation of the
agriculture sector of course under the advice and conditionalities of :nternational
4inancial :nstitutions (:4:s). 5peaking at a seminar" former 4ederal ;inister for 4ood
and !griculture ;r. 8ousuf Talpur said the government under pressure from the
:nternational ;onitory 4und (:;4) and World <ank has #ithdra#n all kinds of subsidy
and even imposed 5T on inputs of agriculture #hich had increase the cost of
production" #hereas other countries including !merica and :ndia are continuously
subsidi9ing their agriculture sector.
v
5imilarly" the present import tariff level" on
average" for farm products is +..1=. This is to#ards lo# side as compared to other
5outh !sian countries> :ndia has an average of .6.)= #hile that of <angladesh is
)..7=.
vi
:n addition to tariff reform the Pakistan overnment has also been rolling back its
intervention in markets for products and inputs by #ithdra#ing the public sector$s
support on procurement of ma?or crops. Pakistan has recently signed a loan
1
Tahir Hasnain is coordinator of a civil society initiative, !T" !atch #roup, based in
$slamabad % Pakistan&
agreement #ith !sian Development <ank as @agriculture reforms programme2 in
#hich Pakistan committed itself to abolishing the support price mechanism for
various crops (including #heat and sugarcane)" shutting do#n food departments"
do#nsi9ing agricultural research institutes and opening up the grain storage sector to
private investors in five years time
vii
. This allo#s prices to be determined by supply
and demand in the market. 4urthermore" the private sector has also been allo#ed to
participate in the import and e%port of agricultural products. Thus" Pakistan$s
domestic prices are becoming more closely aligned #ith international market prices.
!ccording to an :;4 report
viii
" the Pakistan government2s current strategy in
agriculture is to limit the role of the public sector" transfer management to the
private sector" strengthen local capacity" remove policy distortions in factor and
output markets" and assist in natural resource management and environmental
protection.
Pakistan" #ithout a doubt" has the potential to gain a larger share of the
international agriculture trade market in order to gro# economically and cope #ith
#idespread poverty in the country. :t is" ho#ever" argued that despite economic
reforms and trade liberalisation policies over time" domestic policies have failed to
improve domestic supply conditions aimed at promoting agricultural e%port
performance. 5o far" as a matter of fact" our home is not in order to compete in the
free trade regime. WTO affects all #alks of life and no one" even the industrialists" is
a#are and prepared to cope #ith the challenges it poses. Over time policies have not
only failed to boost e%ports" but have also failed to alleviate poverty in the country.
Poverty" unemployment and food insecurity have been rather on the rise for the last
t#o decades.
! study #as recently conducted by this #riter to look at the implications of e%port(
oriented policies in the agricultural sector and on the lives and livelihoods of rural
communities. :t #as noted #ith shock that rural poverty is more severe in areas
#here cash crops are gro#n" particularly for e%port purposes. <ased on this finding"
a field survey #as conducted in cottonA#heat and citrusAsugarcane areas to
investigate the implications of government policies on the lives of farmers. The
situation on ground in both agro(ecological 9ones confirmed that" #ith the e%ception
of a fe#" most of the farmers in these areas have suffered badly at the hands of
government policies over time.
The respondents in the survey complained about agricultural policies that had no
input from the farming communities. ! large number of farmers #ere reported to be
living in absolute poverty and #ere finding them in a hopeless situation due to
enormous socialAsocietal pressures. The situation also confirms that there has been
no trickle do#n effect of government policies and consequently" the rural poverty is
increasing at an alarming rate. iven belo# are the most common problems being
faced by the farming communities at the moment&
1. High cost of production& :t is alarmingly high at the moment and farmers
sometimes get no net return from their harvest. !s a result" they invest in
agriculture reluctantly that further affect the quality of their produce.
2. Irrigation water& ;any farmers depend on diesel(operated tube#ells. Due to
current high diesel prices" they are failing to continue their agricultural activity. :n
canal(irrigated areas" farmers at the tail of canals do not receive sufficient #ater
for their crops and" hence" fail to produce good quality crops.
3. Lack of guidance& Bobody is guiding the farmers ho# to compete in a free
market regime. 4armers have no access to the !griculture C%tension
Departments in the country these days. Only the representatives of agrochemical
companies contact them to market their company products.
4. e!t pressures& ;any farmers have resorted to bank loans in order to
improveAmechanise their agricultural activity but due to some obvious reasons"
they fall into a severe debt trap. 5ome farmers have sold their farm machinery
and agricultural land to clear the debts but many of them are still struggling to
pay the instalments. 5imilarly" due to costly agricultural inputs" poor farmers
usually purchase inputs from retailersAmiddlemen on credit. The payback
conditions are so stringent that hardly any farmer makes profit from his harvest.
". Insecurity in the #arket& The middlemen e%ploit small farmers. They have
actually reduced the farmers$ net returns. 4armers cannot sell their produce
bypassing the middlemen #ho have control over local markets. 4armers thus fail
to market their agricultural produce independently.
$. eteriorating state of food security& ;a?ority of farmers fail to hold back
#heat and rice for their family consumption. Due to various pressures" they sell
out all their produce after the harvest and then purchase food from market
throughout the year. :ntensive gro#th of cash crops has eliminated other food
security crops including vegetables. Within the farming households" #omen and
children are more vulnerable to food shortages.
%. &eduction in the inco#e of far#ing households& This is obviously the
outcome of both increased cost of agricultural production and rising living cost.
On the one hand" farmers$ profit margins have reduced due to high production
cost and lo#Auncertain market prices of their produce. On the other" they have to
purchase food from market that eats up most of their earning. Donsequently"
poor farmers are being marginalised and leaving agricultural activities as #ell as
their villages.
'. eteriorating law and order situation& 4armers have complained that
la#lessness is on the rise. The only la# that prevails is of might is right. Poor
farmers and their families feel insecure as the people in po#er (big landlords and
their minions in cahoots #ith police) violate la# and human rights #ithout any
fear. Theft of farmers$ livestock and other belongings is common #hile the police"
instead of protecting poor people" supports the po#erful.
(. &ising tensions& 4armers have confirmed that over time tensions" disputes and
court cases have increased #hich have damaged social fabric of farming
communities. With the introduction of high yielding crop varieties and high
economic returns in the beginning" farmers have become greedy and isolated
from each other. :ntroduction of farm machinery has also eliminated their ?oint
ventures and cooperative farming. Durrently most of their disputes revolve
around land rights" #ater rights and #omen.
The underlying factor behind these tensions" ho#ever" is increased dependence
on market and farmer$s deteriorating financial condition. 4armers no# kno#
about such lu%uries as cemented houses" TEs" refrigerators" tractors" and
carsAmotorcycles but due to increasing social and financial disparities" only fe# of
them can afford to purchase them. !ll the rest remain tense and curse their fate
as #ell as the state policies for their deprivation. 4armers" #ho take loans either
from banks or retailersAmiddlemen to buy these things" fall into a debt trap.
1).*rowing displace#ent& This basically ans#ers the question as to #hy
urbanisation is gro#ing at an alarming rate. !griculture activity for many poor
farmers is becoming difficult and unattractive and" consequently" several
individuals and families are moving to urban centres. 5ome of them find ?obs
abroad" in ulf 5tates" and have improved the living standard of their family.
;any of farmers that are still left in villages are prepared to move. They seem to
be #aiting only for an appropriate time and opportunities to make the decision.
11. +hrinking space for wo#en far#ers& Traditionally" #omen farmers have
been important player in agriculture in order to sustain household$s food security
and livelihood. 4emale members of the farming households are losing their
involvement in agricultural activities due to heavy use of farm machinery and
ne# farming practices including use of agrochemicals. Due to deteriorating social
norms and la# and order situation" #omen farmers cannot find alternate ?obs.
;ost of them have become confined to their homes.
12.*rowing hopelessness& 4armers form the ma?ority 6* percent of the
population. They may bring a change by e%ercising their electoral pro#ess but an
acute hopelessness has been found among farming communities because of the
fact that they do not have a choice. Only the big landlords or industrialists of
their area can contest elections. Eillages in this system are controlled in such a
#ay that farmers even cannot decide to boycott elections.
The above analysis gives us a mere glimpse of the ground situation. The e%act state
of rural poverty is rather more sever" comple% and beyond one2s capacity to put that
in #ords. Cvery Pakistani have certain rights and" in principle" our overnment has
to assure everyone2s rights i.e. right to basic needs" right to food" right to education"
right to health F healthy environment" right to kno#" right to be heard" right to elect"
right to ?ustice" etc. While fe# urban residents and all the rural elites en?oy such
rights" rural poor are totally deprived. Due to inconsistent and biased policies in the
country" fe# among our society have grabbed ma%imum resources F po#er
rendering the ma?ority population into poverty and social disorder.
:n the conte%t of trade liberali9ation and e%port(oriented" market(based policies in
agriculture" Pakistan lacks consistent and #ell(consulted policies to boost e%ports
and thereby alleviate poverty as #as claimed by the government. The agricultural
policies over time have fuelled rather than alleviate rural poverty. These have no#
started e%posing social disparities bet#een those #ith authority" education" skills"
and mobility and those #ithout them. Our e%perience of trade liberalisation so far is
that it has e%acerbated social and economic polarisation in our country. Our farming
communities" like#ise labourers" traders" industrialists and consumers" are being
e%posed to compete #ith international giants in the free market #ithout taking them
into confidence" making them a#are and helping them prepare. :n reality" the
e%tremes of affluence" over(consumption and over(production in the rich countries
are paralleled by a concentration of poverty" scarcity" and e%ploitation in our poor
communities.
People generally are no# more an%ious about their living standards and their
economic insecurity in the current integrated #orld economy than they #ere before.
:f something is not done about this situation" it may result in severe tension bet#een
the market and other sections of the society.
4arming communities" more specially" are precious segment of the society and it is
recommended that they should be given due respect in national policies. The
overnment must realise the rising vulnerability of small farmers under the WTO
regime. We should principally protect our farmers not only to produce commodities"
but also to eradicate poverty. The recent overnment policies of @corporate farming2
and @import of duty free food products2 are escape tactics and are far from realities.
:n vie# of farmer2s pathetic condition given above" these policies #ill sei9e #hatever
breathing space the poor farming communities have at the moment.
,ndnotes
i
GTe%t of Pakistan Trade Policy )***H http&AA###.iap.org.pkAtradepolicy)***.htm
ii
http&AA###.#orldbank.orgAdataAdatabytopicADPIPPP.pdf
iii
Pakistan Cconomic survey )**.(*7" overnment of Pakistan" 4inance Division" Cconomic !dvisor2s Wing"
:slamabad ( Pakistan.
iv
;alik" 5ohail Jehangir. )**,. !gricultural ro#th and Kural Poverty& ! revie# of the Cvidence. !sian
Development <ank Working Paper ) :slamabad ;arch )**,.
v
G:mperfect Policies <lamed for !griculture 5ector WoesH& story published by the Daily <usiness Kecorder on
)6
th
;arch )**,.
vi
GTrade Policy& :nnovative Proposals for Pakistan2s Trade Policy )**7()**, (;acro and ;eso 4ocus)H by Dr
John Thoburn ()**7) for LBDP ( Trade :nitiatives from Muman Development Perspective" :slamabad N
Pakistan.
vii
Defcts of knowle!ge" #y !bid Oaiyum 5uleri ()**))
http&AA###.himalmag.comA)**)A?ulyAreportI+.html
viii
GPakistan& Cnhanced 5tructural !d?ustment 4acility Policy 4rame#ork Paper" +110A11N)***A*+H by :;4
(+110) http&AA###.imf.orgAe%ternalAnpApfpApakistanA